BOSTON ( TheStreet) -- The five best-performing U.S. technology mutual funds are soaring for a second year in a row, reflecting investors' appetite for riskier stocks, including cloud-computing company Salesforce.com (CRM), Chinese Internet-search firm Baidu (BIDU) and movie-streaming provider Netflix (NFLX).
The top-five performers have recorded returns of 37% to 58% so far this year. The average tech fund surged 62% last year after imploding 45% in 2008, which kicked off the deepest economic contraction in 80 years.
To be sure, performance has been volatile, as the average technology mutual fund, as tracked by Morningstar, is up 20% both this year and over the past three months. Still, that's double the increase of the S&P 500 Index of the largest U.S. companies for 2010.
Fund managers and investors say technology-company orders, which have picked up in the past three months, probably will stretch into next year, according to Morningstar technology-funds analyst Courtney Goethals Dobrow. From the start of the year through mid-August, technology stocks had fallen 3%, so the late-in-the-year rebound represents all of the year's gains.The top performers this year have a run-and-gun management style, for the most part, as seen by their turnover rate, which is as high as 833%. A turnover rate of 100% means a fund's roster of stocks has changed completely once in a calendar year. Technology-fund managers enjoy freedom in deciding what to buy, as seen in the makeup of their portfolios, which range from a big bet on the seemingly staid Apple (AAPL), which revolutionized the world the with iPod, iPhone and iPad, to the upstart Rovi (ROVI), maker of the popular mobile-game application Angry Birds, and the clearly out-of-place Mexican restaurant chain Chipotle Mexican Grill (CMG). But most funds feed from the same trough. The most popular picks tend to be Apple, Salesforce.com, Baidu, Netflix, online retailer Amazon (AMZN), Internet auctioneer eBay (EBAY), software giant Oracle (ORCL) and Internet search company Google (GOOG). Some of the big, and less agile, tech funds are putting in a good showing this year, especially the $1.3 billion Allianz RCM Technology Fund (RAGTX). It's just out of the top five with a 33% return, coming on the heels of a gain of 57% last year. Fidelity Advisor Technology Fund (FADTX), with $719 million in assets, is up 26% by riding Apple hard with a gigantic 15% allocation. Apple has gained 52%. In inverse order, here are the five best-performing technology mutual funds this year. Performance data, provided by Morningstar, reflect returns through Dec. 9.